Round-up: which New Zealand areas are seeing continued growth in property sales or prices?

The latest property figures recently released by the Real Estate Institute of New Zealand (REINZ) show that 5752 homes sold nationwide in May, down just 0.4% from 5776 in the same month last year. This was a clear improvement on sales figures for April and March this year: sales in April and March fell by 11.5% and 15% respectively compared with the same months last year. Nationwide sales totalled just 4262 in April this year, while May sales increased by more than 30% month on month. REINZ said the figures show that confidence among property buyers is steadily recovering.

 

Specifically, May property sales in 7 regions—Northland, Auckland, Waikato, Wellington, Tasman, Marlborough and Southland—rose by 30% or more compared with April this year. Marlborough recorded the largest monthly increase, at 66.7%, while Auckland and Wellington recorded increases of 37.8% and 38.9% respectively. Notably, 653 properties sold in Wellington that month, the highest total since November 2021.

REINZ chief executive Jen Baird

 

REINZ chief executive Jen Baird says Marlborough, Tasman and Wellington stand out as areas where the property market has seen positive changes, with very clear increases in sales volumes. She says high interest rates and the weak economy are clearly still affecting the property market’s performance, and buyers will continue to act cautiously… Since the start of winter, some positive signs appear to have emerged following the Reserve Bank of New Zealand’s easing of loan-to-value restrictions and stabilisation of interest rates.

 

What is happening to property prices?

 

CoreLogic’s latest figures on property values across New Zealand, released this week, show that prices are still falling in 860 of the 917 suburbs surveyed nationwide, while the remaining 57 have seen increases. Of these, 33 suburbs recorded price rises of at least 2%, and 6 saw increases of more than 5%. Notably, all suburbs recording increases of more than 5% are in the southern South Island.

 

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Tuatapere, a rural South Island town, recorded the largest increase, with property values rising from NZ$273,800 this time last year to NZ$295,850 now, an increase of 8.1%. It ranked among the top three for price growth alongside Otautau in Southland and Waimate in Canterbury. Median property values in those two towns rose by 7.6% and 5.8% respectively, to NZ$362,750 and NZ$444,400. Blaketown on the West Coast, Mataura in Gore and Maori Hill in Timaru also recorded annual property value increases of more than 5%.

CoreLogic chief property economist Kelvin Davidson

 

CoreLogic chief property economist Kelvin Davidson says homes in these areas are relatively inexpensive and, unlike other areas, did not experience sharp price surges during the recent housing boom. He says they are not investment hotspots and their high-price pressures are less pronounced, leaving considerable scope for further price growth.

 

CoreLogic’s analysis shows that property values rose in 128 suburbs nationwide over the past 3 months, with 71 recording increases of at least 0.5%. In 15 suburbs, prices rose by more than 1.5%, including some areas in Auckland, Rotorua, New Plymouth and Dunedin. Davidson says the broader quarterly property figures show that price declines in some suburbs have levelled out, with signs that the downturn may soon end. Recently released REINZ figures lend further support to this prediction, indicating that momentum is returning to the property market. Auckland and Wellington experienced the largest price falls during the downturn, but quarterly increases in some Auckland suburbs may be another sign that the market is bottoming out.

 

Jen Baird says that as property sales return to normal levels, the balance between supply and demand may begin to shift. Reports from real estate agents indicate that most sellers are meeting the market, but some continue to insist on higher asking prices, meaning their properties will stay on the market longer.

BNZ chief economist Mike Jones

 

BNZ chief economist Mike Jones says although the days of plunging house prices may soon be over, this does not mean the market will quickly return to boom conditions. The BNZ team predicts that the market correction will end around the middle of this year, with house prices about 16% below their peak in late 2021. Jones believes stabilising mortgage rates will help bring the economic downturn to an end, although rates do not look likely to fall soon. Rising net migration will have a positive impact on the market, particularly as construction activity slows. It is conceivable that housing demand will exceed supply in 2024. BNZ expects average house prices to rise by around 1% to 1.5% each quarter from the second half of this year through 2024.